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Scotiabank, TD leading bidders for Ally's Canadian operations
October 20, 2012
12:32 am
Doug
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Scotiabank and TD are seen as the leading bidders for Ally's Canadian, presumably both the deposit and auto financing, operations, according to this Reuters article (via the Financial Post, a part of Postmedia Network). They've reportedly submitted initial bids. This is a follow-up to the parent Ally Financial's announcement in May. GM continues to be seen as the main bidder for its European, Latin American and Mexican operations. The U.S. operations aren't for sale as of yet.

Scotiabank and TD are also two of the leading providers of so-called dealer financing as well as direct-to-consumer (slightly different) auto financing to consumers with "less than average" or "subprime" creditworthiness, through Scotia Dealer Advantage and TD Financing Services/TD Auto Finance, respectively. If Scotiabank it successful, I'd see them merging the deposit operations with either Scotiabank's deposit broker or ING Direct Canada operations and the auto financing operations with Scotia Dealer Advantage. If TD is successful, basically the same sort of thing. At any rate, what this likely means is our hopes of a new, free unlimited chequing account in Canada appear dashed either way as Scotiabank will already have one via ING Direct and not need another and I don't see TD getting into that business - they're already fantastically popular with Canadian consumers regardless of their service charges.

Ally Canada (ResMor Trust Company) already sold off its mortgage book and servicing operations to MCAP, via this article.

Cheers,
Doug

October 20, 2012
1:39 pm
Yatti
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Would be interesting to see Scotia pick it up.. Hopefully they leave the ING model alone..

October 20, 2012
5:09 pm
Doug
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Yatti said

Would be interesting to see Scotia pick it up.. Hopefully they leave the ING model alone..

I think Scotiabank will definitely leave the ING Direct business model alone and, that being said, it will be totally separate from Scotiabank (not linked to Scotiabank's online banking platform, no in-branch access, etc.). The only things I see them doing is: (a) withdrawing from The Exchange ATM Network within the next 12-18 months after closing and allowing ING Direct customers to use their own Scotiabank Cashstop ATM Network instead and (b) launching a no-fee credit card, either Visa or MasterCard.

Cheers,
Doug

October 22, 2012
12:56 pm
MG
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Looks like RBC is the likely candidate per the following...

MG

October 22, 2012
3:04 pm
cmore
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Yep...here is the most recent news out of the National Post:

Royal Bank of Canada is close to a deal to buy the Canadian operations of Ally Financial Inc. for US$4-billion, according to CNBC.

The former auto finance arm of General Motors Corp. now majority owned by the U.S. government announced back in May that it planned to sell off some of its international operations as a way to pay back government bailouts it took in the aftermath of the financial crisis.

Ally is now ironing out the final details of a transaction that would see Canada’s biggest bank by assets take control of the Canadian operation, according to the U.S. business news television station. Citing unnamed sources, CNBC said a deal could be announced as early as today.

A spokesman for RBC declined to comment.

Ally’s Canadian operation had $15.2-billion in assets at the end of 2011. According to regulatory filings it had a profit of $165-million for the first six months of 2012, down significantly from the same period of 2011.

October 22, 2012
6:05 pm
Doug
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Indeed, this is getting very interesting! I think RBC and TD felt like maybe they missed out when Scotiabank snagged the ING Direct prize. If RBC gets the Canadian assets (which presumably includes all of ResMor Trust Company and its deposit/auto financing businesses) for $4 billion USD, that shows the significant premium on mostly auto loans (which have higher margins, albeit a slightly higher risk profile) as compared to mortgages and deposits. ING had something like $30 billion in deposits and $30 billion in mortgages and was sold for $3.6 billion or something. ResMor, including Ally Canada, has something like $2 billion in deposits and $15 billion in mostly auto loans since they sold the bulk of (or all of) their mortgage porfolio to MCAP.

If RBC is indeed the winner, I guess that I would, albeit indirectly, become an RBC customer for the first time in my life. It'll also be interesting to see if they keep it as a wholly-owned subsidiary or merge it fairly quickly under an as-yet-to-be-named RBC banner (i.e., maybe RBC Auto Financing for the auto lending and RBC Deposit Broker Centre for the deposit operations?). Maybe there is still hope they'll launch a no-fee chequing account to compete with the as-yet-to-be-renamed ING Direct? ;)

As per The Canadian Press article (which I've copied and pasted here since it only stays on Yahoo! News for thirty days or so):

Royal Bank in talks to buy former GMAC Canadian assets: CNBC report

TORONTO - The Royal Bank (TSX:RY) is in talks to buy the Canadian business of the former financing arm of General Motors, U.S. business channel CNBC reported, citing sources.

The channel reported a source said TD Bank (TSX:TD) and Royal Bank have been bidding on the assets, but it was unclear whether TD would top Royal Bank's latest offer for Ally Canada.

RBC declined to comment, and representatives for Ally were not immediately available for comment.

Ally Financial Inc., an auto and mortgage lender, is the former financing arm of General Motors.

The U.S. government bailed out the company, then known as GMAC Inc., as part of the auto industry aid package.

Cheers,
Doug

October 22, 2012
7:54 pm
Doug
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The story that provided the "scoop" on RBC and TD remaining in the auction process for the international assets, in particular the Canadian operations, being handled by Evercore Partners and Citigroup was from CNBC.

Here is that article, in its entirety.

RBC Nears $4 Billion Deal for Ally’s Canada Unit: Sources

KAYLA TAUSCHE
Posted By: Kayla Tausche | CNBC Reporter
CNBC.com
22 Oct 2012 | 12:09 PM ET

Ally Financial and Royal Bank of Canada are closing in on a deal that would value Ally Canada at more than $4 billion, according to people familiar with the matter.

Both RBC and Canadian rival Toronto Dominion had been locked in a bidding war over the weekend, one of these people said, with TD still involved in the auction process. It remains unclear whether TD will move to top RBC’s late-stage bid.

An announcement could come as early as Monday, though talks remain fluid.

RBC declined to comment, and representatives for Ally were not immediately available for comment.

The former financing arm of General Motors, Ally had $15.2 billion in assets in Canada at the end of 2011, according to regulatory filings. The performance of the Canadian business has been lackluster since the crisis. For the six months ended June 30, Ally’s $165 million net income for the Canadian business represented a 40 percent drop from the same period a year earlier, filings show.

Still, the move represents incremental progress for Ally, which in May announced it intended to sell its non-U.S. assets.

The proceeds would go toward buying back a 73.8 percent the Treasury Department still holds in Ally, following its $17 billion bailout at the height of the financial crisis. Because Ally’s business lines converge in automotive and mortgage finance, the crisis left it doubly injured and hampered its ability to recover as quickly as pure-play businesses.

On Oct. 18, Ally announced a deal to sell its Mexico insurance business to Swiss insurer Ace Ltd. for $865 million. Goldman Sachs led the auction for that business, people familiar with the matter said, while Evercore Partners and Citigroup are leading the sales of the remaining international units.

Auctions for Ally’s European and Latin American operations are still ongoing, these people said, with announcements expected in the next two weeks.

—By CNBC's Kayla Tausche
@KaylaTausche

© 2012 CNBC.com
URL: http://www.cnbc.com/id/49503960/

October 23, 2012
7:50 am
Yatti
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Looks like it was confirmed this morning.. RBC to purchase Ally..

http://www.theglobeandmail.com.....le4630654/

November 12, 2012
5:44 pm
Doug
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Yep, indeed, it will be interesting to see for long it takes RBC to fully integrate Ally within RBC and whether they maintain the ResMor Trust Company & Ally Credit Canada Ltd entities or whether their assets and liabilities will be folded within existing RBC entities.

As Ally is mostly savings accounts, GICs and consumer loans, with no demand deposits/chequing accounts, moving them out of ResMor and Ally Credit would be fairly easy and notification to customer in advance of new banking information (i.e., account numbers, transit and institution numbers) and forwarding could be done for say, 6-12 months then that would be two less subsidiaries for RBC to maintain.

Cheers,
Doug

November 15, 2012
5:55 pm
Cmore.
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In looking at the various news releases from RBC; they talk a lot about how this acquisition will strengthen their position within the auto financing sector and spend little to no time commenting on the future of Ally Bank as a deposit taking virtual institution. My bet is this side of the operation will be wound down once RBC receives regulatory approval and begins to integrate the operation.

Just one guy's opinion --- at least Scotia has been more clear that they intend to keep ING as a separate business entity.

November 21, 2012
10:27 pm
Doug
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Cmore. said

In looking at the various news releases from RBC; they talk a lot about how this acquisition will strengthen their position within the auto financing sector and spend little to no time commenting on the future of Ally Bank as a deposit taking virtual institution. My bet is this side of the operation will be wound down once RBC receives regulatory approval and begins to integrate the operation.

Just one guy's opinion --- at least Scotia has been more clear that they intend to keep ING as a separate business entity.

While I don't think the Ally deposit operations of ResMor Trust Company will be wound down, as they are a good capital funding base for the loan operations, I do expect them to be folded into the RBC fold, perhaps even into the Royal Bank of Canada entity or maybe ResMor merged in with Royal Trust or something like that. Whereas ING Groep (always love that spelling, reminds me of the word 'grope'!) is giving Scotia 14-18 months from now to fully transition ING Direct Canada to a new brand (hopefully Scotia will do the right thing and do it within 8-12 months rather than drag this thing out!), there was no mention of a branding transition period. That leads me to believe RBC intends to move the deposits into the RBC fold, either at the Bank or Trust, as soon as practicable. As well, I don't expect Ally savings account rates (GIC rates may remain close to where they are at now) to remain near the top and I could see them coming down to a more "middle of the pack" level, say 1.5% which would put it higher than both RBC's high-interest eSavings account and ING Direct Canada's Investment Savings Account but lower than say Canadian Tire Financial Services or the Manitoba-based credit unions.

Cheers,
Doug

February 23, 2013
2:56 pm
Doug
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More analysis is cross-posted here for review and comment. :)

Cheers,
Doug

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